Rowe Plastic Surgery of New Jersey v. Aetna Health and Life Insurance Company

Background

Rowe Plastic Surgery of New Jersey, L.L.C. and Norman Maurice Rowe, M.D., M.H.A., L.L.C. sued Aetna Life Insurance Company over payment for a medically indicated bilateral breast reduction performed for an Aetna customer. The providers alleged that they were outside Aetna’s healthcare network and that, during a March 10, 2021 telephone call, an Aetna employee represented that the total allowed amount would be based on 85% of the usual, customary, and reasonable rate for covered services. The providers performed the surgery on March 24, 2021, billed Aetna $300,000, and alleged that Aetna paid $45,634.60, less than 85% of that rate.

The complaint asserted breach of contract, unjust enrichment, promissory estoppel, and violation of New York’s Prompt Pay Law. Aetna removed the case from New York state court. After related litigation involving similar claims, Magistrate Judge Ona T. Wang ordered the providers to explain why this case differed from the earlier decisions and why amendment should be allowed. The providers did not timely respond. Judge Wang recommended dismissal with prejudice, treated the providers’ later filing as a request for reconsideration, denied reconsideration, and later denied the providers’ motion for leave to amend.

District Court’s Review

Judge Rochon reviewed the report and recommendation under the standards governing objections to a magistrate judge’s ruling. Because the providers did not specifically object to the recommendation, the court reviewed it for clear error. The court separately reviewed the reconsideration decision and found that the providers had not identified new facts, controlling law, or a clear error that could change the result.

Claims in the Original Complaint

The court held that the breach-of-contract claim failed because the complaint did not allege enough concrete detail to show that Aetna made an offer. It did not allege that the parties discussed the specific services, the surgery’s price, or an explicit undertaking by Aetna to pay at a particular rate. The court stated that the providers’ subjective understanding of the call could not substitute for those allegations.

The court also held that the Prompt Pay Law claim failed because that law applies to healthcare claims submitted under contracts or agreements, and the providers had not adequately alleged such a contract. The promissory-estoppel claim failed because the complaint did not allege a clear and unambiguous promise to pay a particular amount for the surgery or its services. The unjust-enrichment claim failed because the providers did not allege facts showing that Aetna directly benefited from the surgery or requested that the providers perform it.

Proposed Amended Complaint

The court upheld Judge Wang’s denial of leave to amend. It agreed that the providers had not acted diligently, that amendment at that stage would prejudice Aetna and prolong the litigation, and that the proposed amendments would be futile. An amendment is futile when it still could not survive dismissal for failure to state a legally sufficient claim.

The proposed amended complaint added allegations about communications concerning the surgery and proposed new claims for fraudulent inducement and conversion. The court found that the amended contract, promissory-estoppel, and unjust-enrichment claims still lacked the necessary allegations. It found that the proposed fraudulent-inducement claim improperly repackaged the contract claim and did not allege a misrepresentation separate from the alleged payment obligation. It found that the proposed conversion claim was based on the same alleged right to payment as the contract claim and therefore did not allege a sufficiently different wrongful act.

Disposition

Judge Rochon adopted the report and recommendation and the reconsideration order. The court dismissed the complaint with prejudice for failure to state a claim, upheld the denial of leave to amend, terminated pending deadlines and motions, and directed the Clerk of Court to close the case.